Question 1

Which of the following statements is true about the demand for and/or the supply of natural resources?
A) The supply curve for natural resources is more elastic in the long run than in the short run.
B) The elasticity of demand for electricity, natural gas, and gasoline equals approximately 0.1 in both the short run and the long run.
C) Natural resources are demanded by consumers and producers in steadily growing amounts, so future shortages are inevitable.
D) The supply of many natural resources is finite; thus the long-run elasticity of supply must be zero.

Accepted Answer

The supply of natural resources is often constrained by the time it takes to discover, extract, and bring them to market, so the short-run supply curve is relatively inelastic. However, over the longer term, producers can respond to higher prices by developing new extraction methods, exploring new sources of supply, or developing substitutes, which makes the long-run supply curve more elastic.

Question 2

Economic theory indicates that the amount consumed of a natural resource depends on
A) the price of the resource.
B) consumer income.
C) the price of substitute resources.
D) all of the above.

Accepted Answer

Economic theory suggests that the consumption of a natural resource is dependent on various factors, including the price of the resource, consumer income, and the availability and price of substitute resources. Therefore, all the given options are correct.

Question 3

What can be said about the demand and supply of natural resources?
A) The quantity demanded of a natural resource will generally be less responsive to a change in price in the long run than in the short run.
B) The supply of a natural resource will generally be more responsive to a price change in the long run than in the short run.
C) The supply of a natural resource is fixed by nature; it cannot be responsive to a price change in the long run.
D) None of the above is correct.

Accepted Answer

The answer of What can be said about the demand...

Question 4

Why is it that the airline pilots union will likely be stronger and more effective than the fruit pickers union?

Accepted Answer

The answer of Why is it that the airline pilots...

Question 5

Supply and demand analysis suggests that a sharp increase in the price of gasoline will cause the
A) price of fuel-efficient compact cars to decrease.
B) supply of gasoline to decrease.
C) demand for large luxury cars to increase.
D) demand for fuel-efficient cars to increase.

Accepted Answer

When the price of gasoline increases, people tend to look for more fuel-efficient cars in order to save money on gas. This leads to an increase in demand for fuel-efficient cars, which in turn may cause their prices to go up, but not decrease. The supply of gasoline is unlikely to decrease in response to a price increase, and large luxury cars are generally not affected by gasoline prices.

Question 6

Generally, the elasticity of demand for an energy source in the long run will be
A) approximately equal to its elasticity of demand in the short run.
B) considerably more elastic than in the short run.
C) slightly less elastic than in the short run.
D) considerably less elastic than in the short run.

Accepted Answer

The answer of Generally, the elasticity of demand for an...

Question 7

If the prices of energy products rise sharply, consumers will most likely
A) sharply reduce their consumption of these products in both the short run and the long run.
B) reduce their consumption of these products slightly in the short run and more sharply in the long run.
C) reduce their consumption of these products sharply in the short run, but in the long run consumption will fall by only a small amount.
D) increase their consumption of these products slightly in the short run and more sharply in the long run.

Accepted Answer

The answer of If the prices of energy products rise...

Question 8

Doomsday forecasts about running out of natural resources, with dire consequences,
A) have occurred at least as far back in time as the 16th century.
B) have generally been correct, and resources today are nearly all rising in price.
C) seldom are taken seriously enough by the public.
D) began to be heard for the first time after Earth Day of 1970.

Accepted Answer

Doomsday forecasts about running out of natural resources have occurred at least as far back in time as the 16th century, such as concerns about deforestation and the depletion of fish stocks.

Question 9

Resource markets are like any other market in that
A) the increase in quantity supplied in response to a higher price will generally be greater in the long run than in the short run.
B) the amount demanded of a resource is inversely related to its price.
C) higher prices encourage people to search for substitutes.
D) all of the above are correct.

Accepted Answer

The answer of Resource markets are like any other market...

Question 10

Higher prices for natural resources are
A) a natural and inevitable result of resource depletion.
B) not possible for more than a short time, as technological advances clearly guarantee falling resource prices.
C) not the story of the last two centuries, because resource prices have decline through most of this period.
D) the major cause of resource shortages in the world.

Accepted Answer

Over the last two centuries, technological advancements and increased efficiency have generally led to a decline in resource prices, despite temporary fluctuations.

Question 11

Generally, the demand for energy in the long run will be
A) approximately equal in elasticity to the demand for energy in the short run.
B) considerably less elastic than in the short run.
C) considerably more elastic than in the short run.
D) perfectly inelastic because we must have energy to survive.

Accepted Answer

In the long run, consumers have more time to adjust their behavior and make changes to reduce their energy consumption, such as investing in more efficient appliances or alternative energy sources. Therefore, the demand for energy in the long run is more elastic than in the short run, where consumers have fewer options for immediate reduction of energy use.

Question 12

The concept of "proved reserves" refers to the amount of a resource that can be produced
A) in one year's time.
B) in the next ten years.
C) before it runs out.
D) at current prices and technology.

Accepted Answer

Proved reserves refer to the estimated amount of a resource that can be economically and technically extracted using current technology and prices. It does not refer to a specific timeframe for production or depletion of the resource.

Question 13

The supply of oil for users in the United States
A) was never an issue of serious public concern until the 1970s.
B) has never been an issue of serious concern by political leaders.
C) has often been a topic for dire warnings and forecasts of oil depletion.
D) has been more and more in doubt since the early 1980s.

Accepted Answer

The supply of oil for users in the United States has often been a topic for dire warnings and forecasts of oil depletion. The 1970s energy crisis brought attention to the issue and since then, there have been concerns about the depletion of oil reserves.

Question 14

Forests in the United States have, in recent decades,
A) expanded substantially in the amount of wood grown.
B) been steadily declining in acreage and in wood produced.
C) been cut and cleared at a faster and faster rate.
D) shown no trend in growth or shrinkage.

Accepted Answer

Forests in the United States have expanded in the amount of wood grown due to reforestation efforts and increased forest management practices. This has led to an increase in the amount of wood harvested for various purposes. However, there may be localized areas where forests have been cleared for other land use purposes.

Question 15

Predictions that natural resources such as oil will be essentially used up in the next few decades
A) have been frequently made for the past century but have always proven to be false.
B) have usually been based on the quantity of proved reserves.
C) have ignored the role of price in governing the quantities demanded and supplied.
D) All of the above are correct.

Accepted Answer

The answer of Predictions that natural resources such as oil...

Question 16

Proved reserves of petroleum are
A) the verified quantity of petroleum that can be recovered at current prices and levels of technology.
B) the only reserves likely to be available in the future.
C) refined products awaiting shipment to the market.
D) the total amount of the resource in existence, regardless of the productive effort undertaken to expand the future availability of the resource.

Accepted Answer

Proved reserves of petroleum are the quantity of petroleum that has been verified to be recoverable at current prices and levels of technology. This means that there is a high degree of certainty that the reserves can be commercially recovered. Proved reserves are not the only reserves likely to be available in the future, as new technologies and higher prices could make previously uneconomical reserves viable for extraction. Refined products awaiting shipment are not considered reserves, and the total amount of the resource in existence is not the same as proved reserves, which must meet specific criteria for recoverability.

Question 17

In a strike, what does the union have to lose? What does management lose?

Accepted Answer

The answer of In a strike, what does the union...

Question 18

Predictions of severe shortages due to impending natural resource depletion
A) are widely accepted by resource economists even though such predictions are a relatively new occurrence.
B) have been wrong in the past, but most resource economists believe that the threat of resource depletion is now far more severe than ever before.
C) are typically made without adequate recognition and consideration of resource price elasticities.
D) typically assume that price elasticities are greater than they really are.

Accepted Answer

The answer of Predictions of severe shortages due to impending...

Question 19

If a firm operates in a competitive industry and its unionized labor force is successful in bargaining for a wage increase, where is the firm likely to get the money to pay the higher wages?

Accepted Answer

The answer of If a firm operates in a competitive...

Question 20

List some factors that might make the threat of a strike more effective.

Accepted Answer

The answer of List some factors that might make the...

Quiz 16: Applying the Basics: Special Topics in Economics

Which of the following statements is true about the demand for and/or the supply of natural resources?

Economic theory indicates that the amount consumed of a natural resource depends on

What can be said about the demand and supply of natural resources?

Why is it that the airline pilots union will likely be stronger and more effective than the fruit pickers union?

Supply and demand analysis suggests that a sharp increase in the price of gasoline will cause the

Generally, the elasticity of demand for an energy source in the long run will be

If the prices of energy products rise sharply, consumers will most likely

Doomsday forecasts about running out of natural resources, with dire consequences,

Resource markets are like any other market in that

Higher prices for natural resources are

Generally, the demand for energy in the long run will be

The concept of "proved reserves" refers to the amount of a resource that can be produced

The supply of oil for users in the United States

Forests in the United States have, in recent decades,

Predictions that natural resources such as oil will be essentially used up in the next few decades

Proved reserves of petroleum are

In a strike, what does the union have to lose? What does management lose?

Predictions of severe shortages due to impending natural resource depletion

If a firm operates in a competitive industry and its unionized labor force is successful in bargaining for a wage increase, where is the firm likely to get the money to pay the higher wages?

List some factors that might make the threat of a strike more effective.